UPDATE 1-U.S. oil and natural gas drilling rig count at record low

Reuters Staff

3 Min Read

(Recasts with oil and gas rigs falling to record lows based on
Baker Hughes data)
March 11 (Reuters) - The number of rigs drilling for oil and
natural gas in the United States has fallen to the lowest level
since at least 1940, oil services company Baker Hughes Inc
said on Friday, as energy firms continued to slash
activity amid the deepest energy price rout in a generation.
Combined rigs in the U.S. oil and gas fields fell by nine
this week to 480, overwriting a previous record low of 488 in
April 1999, according to the closely-followed industry data.
Oil rigs RIG-OL-USA-BHI alone fell for a 12th week in a
row this week with the rig count down six to 386, the lowest
level since December 2009. Gas rigs RIG-GS-USA-BHI fell by
three to 94, the least since at least 1987.
Energy firms have sharply reduced oil and gas drilling since
the selloff in global crude markets began in mid-2014.
Still, many analysts think the rig count will rebound later
this year with signs that oil prices had bottomed in the last
month after U.S. crude hit a 12-year low of just around $26 a
barrel.
U.S. crude futures ended the week 7 percent higher at
$38.50 a barrel in the fourth straight week of gains on
forecasts of tighter supplies as U.S. and non-OPEC crude output
fell faster than previously expected.
Chevron Corp said this week it will add two rigs in
the oil-rich Permian shale of West Texas in 2016, part of a bet
that crude prices will rise this year.
Others, however, were still reducing rigs.
In Alaska, BP Plc said it will cut rigs in its
Prudhoe Bay field from five to two and lay off more than 200
contracting jobs.
Concurrently, some drillers are investing in new
technologies such as "choking" and "lifting" to get more from
their wells, although those efforts may reduce decline rates
instead of adding production.
U.S. oil output was expected to fall from 9.4 million
barrels per day in 2015 to 8.7 million bpd in 2016 and 8.2
million bpd in 2017, according to the federal estimates this
week.
Morgan Stanley this week forecast North American exploration
and production companies would cut spending on oil and gas rigs
by over 50 percent in 2016 versus 2015, before increasing
spending by over 40 percent in 2017 versus 2016.
Swiss bank UBS lowered its North American rig count
expectations with activity in the first quarter seen declining
by 26 percent from the fourth quarter.
Simmons & Co International forecast the overall U.S. onshore
rig count would fall around 10 rigs per week for the rest of the
quarter.
Evercore ISI forecast the combined land rig count would fall
by an even bigger 15 rigs per week for the rest of the quarter
before holding mostly steady during the second quarter and
rising in the second half of 2016, 2017 and 2018.
(Reporting by Scott DiSavino, Barani Krishnan; Editing by
Marguerita Choy)